In practice, outsourcing means that companies use external suppliers for certain work-related matters. Typically, this may be the case when new job candidates go through a selection process conducted by a hired recruitment agency.

If outsourcing is done correctly and smartly, it can save a company a significant part of its budget that it would otherwise have to allocate to its own permanent staff. At the same time, it also allows companies to focus their main attention where it is most needed.